Home sale by a Canadian moving to USA with GC through my spouse

[sidster]

Hi all,
I’m in the last step of my greencard process. I’m a Canadian citizen co-owning a house with my father (50 - 50). My wife is a Canadian & American citizen. We got married in 2023 and we started the US visa process, we are planning to move in early 2025. Now to my question;
1. Is it better to sell it by December, 2024 or have the option to sell before I move Feb, 2025? We are expecting to gain 500k to 600k and split 50/50
2. If I sell before moving to USA do I have to report it in my tax filing 2024 or 2025?

Any thoughts or tips on how to go about in the this situation would be really helpful in making by decision.

Thank you!!

[nelsona]

I assume both you and your father live in the house now?

You will not be liable for any tax in US when you move, as the treaty allows Cdns moving to US to use the value of their home at the time they leave as the cost basis, so there is no worries there.

If you need to report it (you probably wouldn't since you are below the exemption), it would be in the year of sale.

Form a CRA point of view it would be simpler to sell before becoming non-resident, but either way you would owe no taxes.

Of course, if this is a rental property, the answer would be quite different.

[sidster]

Thank you for your response! Current we are not living there and it is rented out but it is not an investment property as I live in a rental property closer to work and this home is a principal residence.

[sidster]

Thank you for your response! Current we are not living there and it is rented out but it is not an investment property as I live in a rental property closer to work and this home is a principal residence.

[nelsona]

CRA does not accept that a property you rent out can be your principle residence (PR) for that time. They would accept, say, a cottage that was not your main home but was not rented out as a PR, but not a rental property.

Moreover, the treaty provision that allows one to bump up your cost basis MUST be the property you lived in immediately before moving to US,

So, as I said, the answer above changes drastically, since you do not live in the propertry.

Upon sale you will owe taxes to Canada. If you sell after moving, you will be selling as a non-resident, requiring a large withholding on the sle to cover that taxes. Those taxes can be used against the US tax you would owe. You would likely do a deemed disposition upon departure to avoid big US tax bill.
Since you would owe tax, you might as well sell before leaving, thus avoiding any reporting in US.